Reconstruction efforts seen to help fuel economic growth

Reconstruction efforts following the onslaught of Super Typhoon “Yolanda” should result in a rebound in Philippine importation this year, helping support investments and economic growth.

DBS of Singapore, in a report this week, said the drop in total imports in December was not a concern yet, but the level of goods brought into the Philippines from abroad would be a key indicator of the domestic economy’s performance.

The Philippine Statistics Authority last month reported that the country’s imports fell by 0.1 percent to $5.29 billion in December as electronics shipments fell by 7.3 percent to $1.19 billion.

The drop in Philippine imports followed a relatively weak global demand, especially for non-essentials like electronics. This pushed export-oriented firms in the country to import less materials for production.

This was led by the drop in the importation of capital goods by 19.3 percent month-on-month, DBS said.

“While data in this component tends to be more volatile, it typically indicates momentum in investment growth,” DBS said. “Monitoring the trend in imports of capital goods is crucial this year, especially since investment growth has been the key support for overall GDP growth,” it added.

“Reconstruction efforts at the start of this year are likely to provide underlying support to investment growth, “DBS said.

Despite the weak showing, imports data for December showed encouraging signs, DBS said. “The December imports data this week provided a couple of interesting insights,” the bank said.

Imports of intermediate goods, DBS said, rebounded with a growth of 15 percent in December over month-ago level. This marks an improvement compared to the previous two months of decline.

“If this were to be sustained, look for export growth to inch higher in the coming months,” DBS said.